Big Fight is Brewing Over Lab Test Reimbursement

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BY NOW, MOST LAB EXECUTIVES AND PATHOLOGISTS AGREE that Medicare Part B fees and reimbursement guidelines for lab testing have just about become de facto national standards. That’s because private payers increasingly use Medicare as the basis for building their own pricing and reimbursement guidelines.

If you agree with me that this is now a fact in our industry, then you would also have to agree that helping Congress and CMS (Centers for Medicare and Medicaid) establish rational pricing and reimbursement policies for laboratory tests is now a critical success factor for our industry. After all, it is impossible to run a financially-viable laboratory if reimbursement offered by both Medicare and private payers is inadequate to properly recover expenses and leave enough capital for the lab to invest in new diagnostic technology.

My next question for you is simple, and is based on the news that language in the next Medicare funding bill basically states that the existing five-year freeze on CPI price updates for lab testing will not expire at the end of 2002, as planned. Instead, language in this bill would extend the CPI update freeze until competitive bidding for Part B lab test services is implemented. As someone who understands the importance of lab testing to the American healthcare system, are you prepared to take an active role in fighting this proposal?

I ask this question because, since the late 1980s, the lab industry has been utterly ineffective at maintaining appropriate funding for lab tests done under Medicare Part B schedules. As you will read in this issue of THE DARK REPORT, laboratories have suffered a real cut in absolute dollars paid by Medicare. In 1992, Medicare paid $3.9 billion for laboratory test services. This number fell to $3.5 billion in 1998! Moreover, in 13 of the last 14 years, lab services failed to get a CPI price update which equaled the actual CPI index.

There’s a pattern here which should be disturbing to every laboratorian, physician, and patient in the United States. Congress has found it easy to roll over the lab industry and deny it fair updates to price schedules. In response, the clinical lab industry has demonstrated an inability to shape or influence Congressional funding bills in any effective way. Perceptive lab administrators and pathologists should decide that this is the year to change that situation—and educate Congress about the importance of appropriate funding for Part B lab testing services.

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